March 27, 2013

EPA: Top Ten Questions for Obama Nominee Gina McCarthy

March 27, 2013

President Obama recently nominated Gina McCarthy to replace Lisa Jackson as Administrator for the federal Environmental Protection Agency. For the duration of the Obama administration, Gina McCarthy has been the top regulator in the Office of Air and Radiation. In this role, McCarthy has presided over the formation and promulgation of a number of controversial rules designed to limit the use of organic fuel sources. Her record necessitates rigorous scrutiny by the United States Senate. IER offers the following ten questions as a sampling of the sorts of questions that Gina McCarthy should answer before the American people before she is allowed a vote for confirmation:

On October 11, 2011, McCarthy testified before House Oversight Committee, where part of the discussion was concerning EPA and the state of California’s greenhouse gas emissions standards for light-duty vehicles. In the Energy Policy and Conservation Act, Congress delegated to the National Highway Traffic Safety Administration (NHTSA) the authority to set fuel economy standards and expressly forbade the states from “adopt[ing] or enforce[ing] a law or regulation related to fuel economy standards. . . .”[1] (emphasis added). Despite this clear language from Congress, EPA granted California a waiver to regulate greenhouse gas emissions from light duty cars and trucks.

During the hearing, McCarthy was asked if greenhouse gas emission standards were “related to” fuel economy standards. McCarthy replied that, “They are closely aligned but they are different.”

The reality is that carbon dioxide emission standards and fuel economy standards are inextricably linked. There is no commercially available technology to remove carbon dioxide from automobile exhaust and the only way to reduce emissions per mile is through higher fuel economy. That’s why EPA and NHSTA released a joint rule on the subject.

As such, did McCarthy—who has years of experience as a regulator and air quality expert–mislead Congress when she said that greenhouse gas emissions standards for vehicles are not “related to” fuel economy standards for vehicles?

2. Does Gina McCarthy believe Americans are incapable of making good car-buying choices by themselves?

In EPA’s Light-Duty Vehicle Greenhouse Gas Emissions Standards, they argue that even though EPA cannot accurately model people’s car buying choices, the agency is nevertheless justified in imposing restrictive new greenhouse gas emissions standards (ie. fleet-wide fuel economy standards of 54.5 mpg by 2025) because they are assured it will make Americans better off.[2] In other words, EPA believes that reducing the public’s car buying choices will make Americans better off because the average person is unable to understand how much they should be valuing fuel economy. EPA believes that without a fuel economy mandate, Americans will miscalculate the benefits of improved fuel economy by $104.2 billion annually in 2040.[3]

Why are the American people not rational enough to make informed decisions about fuel economy? Why do Washington bureaucrats know best when it comes to automobile choices?

In EPA’s fuel economy mandates, they admit that the rules will increase the cost of vehicles. According to EPA, the latest fuel economy mandate will increase the price of a car by almost $3,000. The National Automobile Dealers Association (NADA) warns that this amount (which is almost certainly an underestimate) will price nearly 7 million drivers out of the market for a car.[4] According to EPA’s calculations, their fuel economy mandate will increase the upfront price of car and the higher fuel economy will save money over time. The problem with EPA’s logic is that people have to come up with the money upfront to buy a car. By increasing the upfront costs, fewer people will have the money to buy a car or to afford a loan to buy a car. In the end, that means fewer people will be able to enjoy the benefits of automobility. Instead, these people will be forced to spend more of their precious time on public transit instead of having the great personal mobility that personal transportation provides.

While $3,000 per car sounds like a steep increase in price that is EPA’s estimate and is therefore likely an underestimate. Other estimates place the price of EPA’s regulation at $4,800 per car. According to NADA’s calculations, this would force 10–11 million drivers out of the market.[5]

What is the justification in increasing the costs of cars and trucks so that 7 million drivers will no longer be able to buy a car?

“Gina McCarthy, head of EPA’s air office, supported the agency’s long-held precedent on the ‘fuel-switching’ question.

‘We haven’t done it in the past, and there’s been good reason why we haven’t done it in the past,’ she said at an event hosted by the Johns Hopkins School of Advanced International Studies. ‘BACT is generally applied to the design of the facility, and that is where we are right now,’ she said.”

Does McCarthy still claim EPA’s regulations will not require fuel-switching? If so, how does she square her past statements and the proposed rule for new electric utility generating units?

5. Does Gina McCarthy support efforts to regulate carbon dioxide emissions from existing power plants?

After EPA has finalized its regulation of new sources of greenhouse gas emissions (ie. the ban on new coal-fired power plants), many believe that EPA would like to regulate carbon dioxide emissions from existing power plants. Ostensibly, EPA would undertake this action because of global climate change mitigation efforts. However, unilateral action by the United States would have very little to no climate impact according to the models of the Intergovernmental Panel on Climate Change (IPCC).

Based on assumptions in the IPCC’s Assessment Reports, if the U.S. as a whole stopped emitting all carbon dioxide emissions today, the impact on projected global temperature rise would be a reduction, or of approximately 0.08°C by the year 2050 and 0.17°C by the year 2100—amounts that are, for all intents and purposes, negligible.

Why should EPA impose billions of dollars in costs, ostensibly to impact global climate change, when the IPCC’s science says that unilateral action by the United States have at most a negligible impact on global climate?

6. Will Gina McCarthy lead EPA to assault natural gas power plants the same way it has targeted coal-fired power plants?

The EPA’s New Source Performance Standards for Greenhouse Gas Emissions for New Electric Utility Generating Units are not based on having any meaningful impact on climate. In fact, in the proposed rule, EPA stated “we do not anticipate any notable CO2 emission changes resulting from the rule.”[6] In other words, EPA admits that these greenhouse gas emission standards for new sources will not impact global warming and global climate in any way.

Because EPA’s greenhouse gas emission standards are not based on any climatic improvements, or changes, after EPA regulates coal power plants out of existence, when will EPA also regulate natural gas power plants out of existence? After all, the logic of EPA’s proposed new source performance standard assumes that anygreenhouse gas emissions cut is beneficial regardless of climate impact. Therefore, according to EPA’s logic, it should ban natural gas power plants as well.

7. Why was Gina McCarthy’s estimate of the impact of the MATS rule on power plant closures so wrong?

McCarthy’s office was, at best, incompetent in their modeling of the impacts of the Mercury and Air Toxics Standards (MATS).Testifying before Congress, McCarthy claimed that the MATS rule would lead to only a “modest amount of generating capacity” (4,700 MW)[7] closing. This was a gross understatement. According to research by the Institute for Energy Research, the MATS rule will result in at least 35,000 MW closing[8] and Barclay’s estimates that 42,000 MW will close because of MATS.[9] McCarthy’s testimony was off between 650 percent and 800 percent.

Why were EPA’s estimates for the impact on the electricity generating sector so wrong? Given EPA’s poor track record, why should anyone believe EPA’s claims on the amount of generation that will close as a result of EPA’s regulations?

8. How does Gina McCarthy justify the economic cost for EPA’s mercury reduction efforts when these regulations have minimal environmental impact?

Truly, the impacts of the MATS rule are immense.The costs of the MATS rule are astronomical and the benefits of the mercury reductions are tiny. According to EPA, MATS would cost $10 billion and only result in $500,000 in benefits from mercury reductions.[10]

Why should Americans pay $2,000,000 for every $1 dollar of mercury reduction benefits from the Mercury and Air Toxics Standards?’

9. What is Gina McCarthy’s commitment to transparency and accountability at the EPA in light of the agency’s refusal to release information about how regulations are crafted and marketed to the public?

EPA refuses to release the databases upon which the benefits of the MATS rule, and 60 – 81 percent of the estimated benefits of all federal actions, are based.[11]The overwhelming benefits in EPA’s economic analysis of the Mercury and Air Toxics Standards rule come from reductions in particulate matter, not from reductions of mercury or air toxics. McCarthy and other administration official have repeatedly failed to respond to Congressional requests to make the underlying databases (the “Cancer Prevention Study” and the “Harvard Six Cities Study”) publically available. These datasets were funded by the public and yet EPA does not allow public access to the data. One of the tenets of science is replication of data, but this is impossible without EPA allowing the public access.

President Obama has been very forceful on improving transparency and openness in government. In a memo to on transparency and open government, he stated, “We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration.”[12]

Why has EPA violated President Obama’s pledge on transparency and open government? Why should the public trust EPA on science when EPA refuses to release the basis for most of the benefits EPA claims its regulations produce? Will Gina McCarthy adhere strictly to federal FOIA laws and other statutes that protect taxpayers? Does she intend to use a personal gmail account or an alias to conduct official EPA business? Has she in the past?

10. Does Gina McCarthy believe EPA’s economic analyses have any real value even though the analyses omit the impact of the costs of regulatory compliance?

EPA’s use of economic models defies common sense.NERA economic consultants recently examined 48 air quality rulemakings from 1995 through 2010 and examined EPA’s estimates of employment impacts of these rules.[13] NERA found that EPA claimed job creation benefits from complying with the rules, but contrary to common sense, EPA ignored the effects of regulatory compliance costs. NERA compared their economy-wide modeling to EPA’s modeling and found:

EPA’s Cross State Air Pollution rule would have an impact on worker incomes equivalent to the annual loss of 34,000 jobs from 2013 through 2037, compared with EPA’s claim of 700 jobs per year gained.

EPA’s Industrial Boiler Maximum Achievable Technology (MACT) rule would have a negative impact on worker incomes equivalent to 28,000 jobs per year on average from 2013 through 2037, compared to EPA’s claim of 2,200 per year gained.

EPA’s planned ozone National Ambient Air Quality Standard (NAAQS) would reduce worker incomes by the equivalent of 609,000 jobs annually on average from 2013 through 2037. EPA has not yet published an employment impact for the ozone NAAQS.

Why does EPA ignore common sense in analyzing the employment impacts of its rules? Why does EPA only look at the employment impacts of complying with the rules (ie. it only considers the new jobs created in building pollution control equipment for example) without looking at the broader impacts of higher cost on the economy?